The Delhi High Court is set to examine whether statutory allowances received by judges of the Supreme Court and High Courts can be subjected to tax under the new income tax regime, following a challenge to a Central Board of Direct Taxes (CBDT) office memorandum restricting the benefit to the old tax regime.
The petition, filed by the Delhi Tax Bar Association (DTBA), assails the CBDT’s September 12, 2025 Office Memorandum, which states that the statutory exclusion of certain judicial allowances from taxable salary would continue only under the old tax regime. The matter came up before a Division Bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta.
The hearing, however, was adjourned midway after Delhi High Court Bar Association (DHCBA) President N. Hariharan intervened and requested the petitioner’s counsel not to argue the matter during the ongoing abstention from work by advocates.
The challenge centres on Section 22D of the High Court Judges (Salaries and Conditions of Service) Act, 1954 and Section 23D of the Supreme Court Judges (Salaries and Conditions of Service) Act, 1958, which provide that rent-free official accommodation, conveyance facilities, sumptuary allowance and leave travel concession shall not be included in computing a judge’s income under the head ‘Salaries’.
According to the DTBA, the CBDT has erroneously treated these statutory exclusions as tax exemptions available only under the old regime. The Association contends that the allowances never form part of taxable salary in the first place and therefore cannot be denied under the new regime. It has further argued that the impugned memorandum violates Articles 125 and 221 of the Constitution, which prohibit variation of judges’ salaries and allowances to their disadvantage after appointment.
The petition seeks quashing of the CBDT memorandum and directions to modify Form 24Q, Form 16, ITR-1 and ITR-4 to enable judges to report the statutory exclusions while filing returns under the new regime. An interim application also seeks an extension of the July 31 deadline for filing income tax returns for Assessment Year 2026–27.
During the hearing, Senior Advocate Sachit Jolly, appearing for the DTBA, suggested an interim arrangement whereby judges could disclose the amounts under the head ‘receipts not in the nature of income’ while filing their returns, and the Income Tax Department may refrain from processing the issue until the Court decides the petition.
DHCBA President N. Hariharan intervened during the hearing and appealed to Senior Advocate Sachit Jolly to defer the matter in view of the Delhi High Court Bar Association’s ongoing abstention from work protesting the proposed enhancement of the pecuniary jurisdiction of the Delhi District Courts.